The Insurance Regulatory and Development Authority (IRDA) has levied a fine of Rupees Twenty two lacs on Kotak Mahindra Old Mutual Life Insurance Company for violation of certain provisions.
IRDA conducted an onsite inspection in January 2011 of Kotak Life post which the Authority identified a few areas where the insurance company was in violation of certain provisions of the law.
Under group insurance schemes, Kotak Life claimed to have made a few payments towards the ancillary services and other facilities to their master policyholders, many of whom are also corporate agents of the insurer. IRDA observed that those payments in the name of reimbursement of administrative expenses to the master policyholders are in violation of the law. A penalty of Rupees Fifteen Lakhs has been imposed for this act.
Kotak life modified the policy terms of Complete Cover group plans after the clearance of the product i.e., inserted a clause denying the death claim if occurring within 90 days from the Date of Commencement of risk. By introducing such clause without obtaining the prior permission of the regulator, insurer violated the F & U procedure and a penalty of Rupees five lakhs only has been imposed
Most of the findings were in favour of Kotak Life Insurance and charges were not pressed by the regulator. Kotak Life was penalised on violation of only four procedures where the penalty amount totals up to Rupees 22 lakhs.